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P002 Classic Table 1

Revenue402,972
Direct margin146,561
Activity cost99,267
ABC profit47,295 (11.7%)
Traditional profit-30,333

hidden winner Traditional costing assigns 176,894 of overhead from 6,325 labour hours; ABC assigns 99,267.

Profit waterfall

0100,000200,000300,000400,000500,000 Revenue: 402,972 402,972 RevenueDirect cost: -256,410 -256,410 Direct costDirect margin: 146,561 146,561 Direct marginMachine run: -40,587 -40,587 Machine runHand assembly: -19,336 -19,336 Hand assemblySetups: -18,524 -18,524 SetupsQuality inspection: -17,874 -17,874 Quality inspectionEngineering changes: -2,945 -2,945 Engineering changesProfit: 47,295 47,295 Profit

Activity costs

ActivityCostShare
Machine run40,58741%
Hand assembly19,33619%
Setups18,52419%
Quality inspection17,87418%
Engineering changes2,9453%